13Chp20-Econ3310 - Expenditure Multiplier = a + mpc × Y +...

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Unformatted text preview: Expenditure Multiplier = a + mpc × Y + I a I = + 1 − mpc 1 − mpc ISLM Model = 1 1−mpc > 1, again expenditure multiplier According to Keynes, changes in autonomous spending (a or I , but mostly I ) are dominated by “animal spirits”. Total autonomous spending is A = a + I ∆Y ∆a A change in autonomous consumption spending a leads to an even larger change in aggregate output. ⇔Y Y Changes in Autonomous Spending Aggregate Output ...
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This note was uploaded on 02/14/2012 for the course ECON 3310 taught by Professor Dix during the Fall '08 term at York University.

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